The financial literacy level of the average Filipino remains alarmingly low—a problem that begins with poor childhood education that persists until their adult years, according to the country’s financial regulator.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said Filipino adults could correctly answer only three out of seven financial literacy-related questions covering basic numeracy, computing compounding interest, fundamentals of inflation and investment diversification.
Citing the results of a study by the World Bank, the BSP said only 2 percent of Filipino adults answered all questions about financial literacy correctly.
“The study also showed that Filipinos lack specific knowledge to make informed financial decisions,” the central bank said, stressing that financial education was an “imperative,” considering the country’s low financial literacy levels.
The same study indicated that money management habits formed in childhood stay into adulthood.
Those who began saving as children display better attitudes to saving, and tend to outperform their peers who did not develop the habit early in the areas of choosing financial products and services, monitoring expenses and planning for retirement, the central bank said.
“The BSP believes that a financially-learned citizenry can be more effective in productively contributing to the Philippine economy,” BSP Governor Nestor Espenilla Jr. said. “To date, financial education remains a formidable task, one that requires coordinated multistakeholder action.”
The central bank pointed to a growing body of literature indicating that a financially literate population was able to make better financial decisions, have higher levels of savings and diversified investments, and were more competent in managing debt.
These data suggest that the best way to nurture sound financial culture and behavior among future adults is to start practical financial management lessons at a young age.
As such, the BSP, the Department of Education (DepEd) and BDO Foundation will sign today a memorandum of agreement to advance financial education in the Philippines.
The agreement covers the development of videos as tools to teach basic financial literacy concepts like saving and money management in public schools.
These videos, designed for learners as well as educators, are accompanied by teaching guides to further equip and support the DepEd in mainstreaming financial education in the K-12 curriculum.